Economic Insight
Issue 20
04.08.10
www.prsformusic.com/economics
Adding up the UK music
industry for 2009
Prepared by Will Page and Chris Carey,
PRS for Music, London
In the summer of last year we published the
‘Adding up the Music Industry for 2008’ to
explain how much the entire UK music
industry was worth, and more importantly
how it all hangs together. Our hope is that
this work will become a valuable reference
document for the industry and all of its
stakeholders to understanding and
appreciate all of the rights, relationships and
revenue streams that UK music generates.
appreciate the international context and
recognise the value of music to UK plc on the
world stage. To do this, we’ve offered three
new areas of analysis: (i) the role of UK
songwriters and publishers as net exporters
of repertoire (ii) the divergence between the
signs of stabilisation in the UK and
pessimism being expressed in the US and (iii)
the role of music in driving tourism in the
current economic climate.
This year we have revisited the same ‘adding
up’ exercise with more evidence, improved
analysis and a better understanding thanks
to constructive and collaborative feedback
from across the media sector. The principle
motive for this work remains the same: the
better we understand the true makeup of
this complex industry, the better it will
perform overall. Encouraging signals of
market stabilisation in 2009 mean that
armchair critics ought now to take note of
how the industry has adapted to change.
Whilst the overall picture is one of
stabilisation, any talk of green shoots should
be tempered by stressing caution over
complacency. To quote the late Thomas
Edison, “we shall have no better conditions
in the future if we are satisfied with all those
which we have at present”. Some of the
challenges currently facing the UK music
industry stem from regulation, recession and
technology, especially as fast paced
developments in cloud computing look set
to take online music consumption ‘off line’.
Regardless of what threats and opportunities
face the UK music industry; this report will
help the reader understand what areas will
be affected and how best to react.
In addition, this year’s report goes beyond
what these achievements mean in the
domestic setting, and enables the reader to
UK music industry bucks
the trend in 2009
Disclaimer: This report has been prepared on the
basis of information in the public domain and
from other sources by Will Page and Chris Carey
at PRS for Music and is provided to intended
recipients for information purposes only and
should not be relied on for any other purpose.
The report should not be reproduced, transmitted
or disclosed to any other person without the
consent of the PRS for Music or its licensors.
For further enquiries, information, and to request
permissions, please contact: press@prsformusic.
com. The opinions expressed in this report are,
unless otherwise indicated, the authors’ own
and do not necessarily constitute the view of
the Management or the Boards of MCPS, PRS
or any associated company.
So, here’s how the big numbers shape up: the size
of the pie came to £3.9 billion, up 5% on 2008.
This year, the pie not only grew again but, most
notably, UK recorded music revenues bucked a
global downward trend and flattened out. These
tentative signs of market stabilisation are striking
as UK retail spending on DVDs and computer
games displayed double digit declines in 2009. It
is interesting to consider differences between old
and new media, as both cinemas and live music
were up in 2009, (whilst DVDs and Physical CDs
were down) suggesting that events based
entertainment is where the market for ‘media’ is
moving towards.
The big numbers for 2009
£3.9 billion, up 5%
•
•
•
UK music bucking downward
trends at home and abroad
International licensing
revenues underpin the success
Recorded revenues stabilising,
live continued to grow
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This report highlights that both consumer and business revenues displayed
growth, the latter maintaining its share of an increasing pie at 25%. In
addition, in this year’s report we’ll present several deep dives into the data
to share new insights on what’s driving the live music industry. For
example, we’ll carve the live market up by geography, to show where in the
UK the growth was taking place. Before getting started, though, it is
important to acknowledge that this increasingly complex and cross border
industry is proving harder to add up.
mean, and for whom. Whilst one could argue that if Susan Boyle and
Michael Jackson had not produced the unexpected sales that they did then
aggregate recorded music revenues would have continued on a southward
trend. Add to that, if Take That had not sold record numbers of tickets that
live would have grown more slowly. The reality, nevertheless, is that 2009
was simply not that bad a year for the UK music industry, especially when
you consider it took place during the deepest economic downturn of a
generation. For those looking for Schadenfreude, look elsewhere.
With all the ‘macro’ analysis presented in this year’s report we encourage
the reader to treat our work as a view of the music industry from 30,000
feet and read beneath the top line to work out what all of these trends
So, we’ll begin by populating the table and offering some clarity on the
caveats within this year’s report to ensure the reader understands the
moving parts of this increasingly complex business.
Adding up the estimated value of the music industry in 2009
(£ million )
Value
% Change
BPI retail value of recorded music industry
£1,356
0.0%
Estimated value of the live music industry
£1,537
9.4%
Business-to-Consumer Total for 2009
£2,892
4.8%
£511
4.1%
£69
3.0%
BPI record company licensing revenues
£194
6.6%
Estimated publisher direct revenues
£103
6.1%
Advertising and sponsorship
£90
0.9%
Business-to-Business Total for 2009
£967
4.4%
Aggregated total B2B and B2C Value
£3,859
4.7%
PRS for Music gross collections
Adjustments
£623
Adjustment-for-double-counting mechanical
-£89.0
Adjustment-for-double counting live revenues
-£22.8
PPL and VPL gross collections
£141
Adjustment-for-double-counting BPI revenues
-£72
Clarity on caveats
One of the achievements of last year’s ‘Adding Up’ report was
that it offered a long overdue awareness about what makes up
the whole UK music industry. This encouraged questions and
feedback from its stakeholders which have further strengthened
this edition and mean that this work can continue to help the
industry succeed in these uncertain times. Much of the constructive
feedback has allowed us to build upon the work. However, listed
below are three of the challenges the authors still face, which
continue to raise more questions than answers.
• Is B2B and B2C still the right way to carve up revenues?
• Which revenues are channelled back into UK music?
• Where to draw the line in defining the UK?
Firstly, the original purpose of carving up the UK music industry into
B2B and B2C revenues stems back to a timely 2007 paper titled
Recession and Royalties, as it allowed the reader to better
understand how an economic downturn might affect consumers and
businesses differently. Think: if the economy is showing tentative
signs of recovery, but lots of public sector workers are about to lose
their jobs, its plausible to argue that B2C revenues are more exposed
to the cuts in public spending than B2B over the medium term.
Secondly, an even bigger challenge was working out how to define
ancillary live music revenues that are channelled back into the music
industry. Our live market valuations are based on ticketed events,
but everyone knows of instances where the gig might be free to
access, with the band taking a share of the bar – which limits the
explanatory power of our data. Additionally, sponsorship of tours and
venues has become more complex (and more valuable) than first
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estimated. Put bluntly, the value of live music is much broader than
the face value of a ticket and this year we’ve worked with industry
experts to estimate the value of ‘on the night spend’ for 2009 and
2008, whilst furthering our understanding of B2B live music revenues
from the advertising and sponsorship pool.
Thirdly, advances, equity and cross border licensing make year-byyear and country-by-country statistics harder to interpret. This leads
to a problem of where to draw the geographic line when defining
what UK music revenues should and shouldn’t consist of. There is
simply no industry rule for this, but the principle we’ve applied here
is to focus on published numbers where possible as they are both
recognisable to the reader and verifiable to the researcher. Examples
of discrepancies occur when you consider the omission of
international touring revenues of UK acts which may significantly
understate the true value, whilst not adjusting for royalties sent
overseas could be argued as inflating the picture.
Recorded music: where flat is the new up
There is really only one question which the surprisingly resilient
performance of the recorded music sector last year gives rise to,
which is this: will it last? It’s a tough call, and as always so much
hinges on the critical fourth quarter release schedule, but so far we
remain positive that revenues will continue to show signs of
stabilisation in 2010. But before that, let’s get into the detail of what
happened last year. Firstly, the consumer spent broadly the same on
recorded music in 2009 as they did in 2008 – which is startling
considering they spent over 10% less on DVDs and 11% less on
Computer Games. That achievement not only bucks a five year
downward trend, it beats clear signs of contraction elsewhere in the
media sector.
There is one big caveat to last year’s performance which is critical in
determining how 2010 compares, which is the 53 week year – as
2009 benefitted from enveloping the first few days of January into its
calendar. Nevertheless, unit sales of artist albums held up
remarkably well, as did retail prices which are now showing signs of
stabilising at around £7.99, although there are outliers at both ends
of the spectrum, with online physical retailers like Play.com
experimenting with price points that are north of £10, whilst Amazon
put out frontline digital albums at £2.99. The role of HMV in this
relative success story cannot be ignored. They have helped off-set
the loss of Woolworths and Zavvi, have posted stable turnover and
operating profit numbers and are expanding their temporary pop-up
stores. As will be explained shortly, the US market simply does not
have this supply side effect.
Digital revenues have yet to show signs of cooling, and are definitely
showing signs of diversifying. That makes tracking and interpreting
trends harder than ever, and on this note the BPI should be
applauded for their latest reporting on trade values which allows for
unprecedented market analysis – few other countries allow for such
detailed assessment. One trend is that we appear to be moving
away from a one-in-five rule to describe digital’s share in record
label trade revenues and towards a one-in-four ratio, where online
and mobile make up a quarter of a record labels’ revenue base.
Given that physical has displayed remarkable resilience, this ratio is
especially noteworthy.
has never seen before, with the former breaking the quarter of a
million watermark online.
The upward trend in digital albums poses an interesting question as
to where the demand is coming from: is it consumers switching from
physical to digital format, up selling from digital singles to digital
albums, or from P2P to legal? Regardless, the fact that digital
albums contribute the same value as digital track downloads means
that armchair critics need to reappraise their analysis when claiming
the online market is 'all about singles'.
Is the US the golden child, or problem child?
The US has grabbed more digital music headlines than any other
country, ever since online exploitation started back in the summer
of 1999. Those headlines reflect not only the corporate headquarters
and personalities of the leading innovators such as Napster’s Shawn
Fanning and Apple’s Steve Jobs, but also the hub for new innovations
like the controversial lockers debate and infamous legal actions
against file sharers. Another justification for American dominance is
simply the ‘absolute’ size of the US digital market, now valued at
over $2 billion, which towers over any other country. This has led to
an impression that the US is a leader in adapting its music industry
to a digital era, and many stakeholders have concluded that the UK
and the rest of Europe are trailing behind.
A much touted ratio states than an impressive one-in-five albums
sold in America last year were digital. The temptation here is to
assume that the ratios in other countries lag behind. However, the
purpose of this case study is to show you that the one-in-five ratio
tells you more about the collapse in the physical market (the five),
than the outperformance in digital (the one). Put more bluntly, the
US digital market is the biggest in absolute terms (then again it is
the biggest music market so you would expect that) but when
viewed relatively, evidence of outperformance in digital is actually
overshadowed by the sheer collapse in physical value.
The chart below helps compare the UK and US recorded music
markets relatively, by dividing three sources of revenue by the
respective countries population. The first source of revenue is
performance (or neighbouring) rights, which are collected mainly
by the fledgling Sound Exchange in the US and the more
established PPL in the UK. Here, US performance revenue per
capita is a mere $0.23, whereas the UK success story PPL collected
an impressive $2.00 per capita. On digital, the US revenue per capita
was an unquestionably impressive $6.53, whereas the UK revenue
per capita of $5.62 (which has been adjusted to include mechanicals
to make it directly comparable with the US), is shown to be 86% of
its relative size. However, this relative strength is put into context
when you view the blue bars of physical, where the UK’s per capita
revenue of $18.92 is more than twice the size of the US which now
stands at only $8.32!
The digital albums market is perhaps the most intriguing, especially
as downloads are now accounting for one in six albums sold in the
UK after increasing their sales over the most recent 12 months to
May 2010 by 35.4%. To date, just 12 albums have sold more than
100,000 digitally, but both Kings of Leon and Lady Gaga are
exhibiting ‘tipping point’ style traction in digital album sales that
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As with any productivity analysis, you might be tempted to ask what
this per capita comparison actually means. Keeping that age old
adage of ‘giving up analogue dollars for digital dimes’ firmly in mind,
it means that the UK should be especially grateful to HMV and
other remaining high street retailers for helping hold those analogue
dollars up. In the US, the RIAA reported that not only is high street
presence eroding, with Best Buy, Wal-Mart and Target dominating
what choice is available, but that ‘churn’ (or stock turnover) is also
increasing. This presents a double whammy effect in that there is
less chance of supplying your recorded product to the high street
and, should it be stocked, it will be there for a shorter time.
The bottom line is this: there’s very little supply on the US high
street, with many towns and cities now without a high street
recorded music retailer, and hence very little evidence of demand. In
contrast, the UK seems to be balancing a resilient analogue dollars
market with a robust digital dimes business. Digital revenues in the
UK are around twice that of Germany and France in absolute terms,
both of which have larger populations! Stepping back from this
analysis, what these stark differences across two of the global
industry’s most important markets really emphasise is the need to
be wary of generalisations when discussing ‘global’ trends.
When trying to gauge an outlook for both the US and UK markets,
one plausible line of thought is that the late adoption of digital
music in the UK will lead to an element of ‘catch up’ growth, whilst
today’s near non-existence of chain music stores in the US makes
you wonder (and worry) what this chart will look like in five years’
time. The term ‘catch up’ refers to the fact that the US was a first
mover in broadband adoption (platform), iPhone penetration
(device) and the launch of iTunes (service), which suggests that the
UK market could be running at a lag with the US.
However, more worrying is the prospect that encouragement
displayed by the UK physical market will wear off and follow the
perilous path of the US, where the lack of supply has permanently
dented demand. Ultimately, the retailer will have the final word, and
profitability will have a big say. In researching this area, a US retailer
told us that a cheap pair of sunglasses generates more profit than a
CD, and that has to cast a cloud over the outlook of the physical
product market. Sunglasses may not be required.
Live music industry: masters of scarcity
The live music industry exhibited a productivity gain in 2009 by
generating more money through fewer events. This anomaly sits
well with a casual observation that whilst some festivals ‘got their
fingers burned’ last year and had to cancel due to poor advance
ticket sales, the majority of events sold out and did so with higher
ticket prices. The way the numbers stack up this year suggests that
the sector has mastered pricing their scarcity during a recession,
with primary ticket revenues up 5.8% to £957 million, whereas
secondary ticketing revenues were up 15% to £172 million. On the
night spend was re-estimated using a more detailed methodology
this year, and grew by 16% to £408 million, leaving the value of
consumer spend on live music at a record breaking £1.5 billion, all
achieved during the deepest economic downturn in a generation.
It is important to be clear on methodology, definitions and data
sources. For the value of primary tickets (those tickets sold from the
box office and official sources) we used tariff receipts declared to PRS
for Music, factored in VAT and added a prudent booking fee of 10%.
Secondary ticketing values were provided by TixDaq, who collect data
from the main online secondary platforms such as eBay, Seatwave
and Viagogo. Finally, we have improved our methodology for
estimating what we now term ‘on the night spend’. Since not all
venues are the same, and the people spend different amounts at a
festival compared to a stadium, we segmented venues by capacity,
capturing the number of events taking place and the royalties
generated. Taking existing survey data from festivals and adding a
bespoke survey of industry experts, comparing this with company
accounts and Mintel estimates, we determined an industry
representative average spend per person, per venue. Multiplying this
by the number of attendees across different venues we calculated a
total on the night spend. Following this change in approach, we need
to revise our valuation for 2008 (which increases to £352m) in order
to provide a meaningful trend and show consistency.
Page 4 of 9
Unsurprisingly, festivals have the highest spend per person, whilst
arenas accounted for the lion’s share of total revenue.
Stepping back from PRS for Music analysis, there are questions on
the sustainability of the live music industry’s growth trajectory to
date. Firstly, as reported last year, the gap between the grass roots
acts and superstars is widening, both in touring and at events where
the big names are needed to attract fans. This gap is also reflected
in the fees demanded by many top acts (AC/DC at Download this
year was a prime example). Down in the tail, the closure of pubs (49
a week, according to The Publican) puts more pressure on the low
end of the market, which makes it increasingly difficult for emerging
talent to find an audience. Secondly, there is increased consolidation
across the live music industry, and while many are still waiting to
feel the effect of the Live Nation Ticketmaster merger, other firms
are also tying knots. HMV completed its purchase of promoter/
venue chain Mama Group and both AEG and Academy Music Group
are continuing to expand their venue inventory. Thirdly, and most
worryingly, Pollstar recently reported a 17% year-on-year drop in
revenues from the top 100 US tours for the first half of 2010,
suggesting that the bubble (over there) may well have truly burst.
Transposing that indicator to the European festival circuit, and IQ
Magazine reported that the average attendance based on capacity
was down by 3% to 86% in 2009, with a 4% reduction in sell outs
from 42% to 38%.
This could, of course, be down to scarcity – more capacity or fewer
people. That said, it is impossible to ignore the innovation taking
place in this space, be it ongoing renovations and improvements in
venues, better production facilities and food & beverage offerings,
VIP suites and upgrade packages, sophisticated data management,
or the close forging of fan relationships, all of which combine to
increase the concert going population and hence demand.
In addition, we also need to appreciate the positive impact of
services like Songkick which are akin to Facebook for live music fans
with the end result being more awareness, more recommendations,
and consequently more fans going to more shows. The Songkick
business model looks to improve on a very simple observation from
Sean Moriarty, former CEO of Ticketmaster, who said: “Nearly 35%
of [ticket] inventory goes unsold and if you ask fans why they didn’t
go to shows, one of the more popular reasons is ‘I didn’t know about
it’.”
expected to grow further.
PRS for Music reported record collections again this year, rising by
2.6%; however beneath the top line there were declines in two of
the four main revenue streams, with growth coming from Public
Performance Sales (PPS) and International. MCPS, which collects for
physical product, saw revenues decline at a broadly consistent rate
of 9.3%, with the driver of decline being reduced volume. Broadcast
and Online saw revenues peak in 2008 and a decline of 1.5% in
2009 which resulted mainly from the reduced collections in the
troubled commercial radio sector. Reported Online revenues grew
72.7% to £30.4m, reflecting the increased number of legal licensed
digital music services available in the UK and across Europe.
However, this makes any ‘holy grail’ analysis between declining
physical and growing digital revenues awkward as you are comparing
last year’s pan-European apples (incorporating revenues from joint
ventures such as CELAS) with domestic pears. Public Performance
Sales has seen stable year-on-year growth of around 5% to 6% until
last year, when the recession adversely affected the licensing base
and slowed the growth rate to 2.3%. International was the most
notable success story from the four revenue streams with PRS for
Music’s international income totalling £166.6m in 2009, an increase
of 19.4% on the previous year.
International exploitation is becoming an increasingly valuable part
of the UK music industry and Britain continues to be one of only
three countries in the world who are net exporters of music (see
updated chart overleaf). PRS for Music’s strong-performing
repertoire has resulted in a £100m increase in overseas royalties in
the last decade, where as PPL has gone from zero to nudging £20m
in less than a decade. The most significant demand comes from the
US, France, Germany Japan and Holland, although there is a growing
appetite from emerging markets, including Central and Eastern
Europe and South America. One of the key forms of exploitation is
music used in broadcast is the key sector, with TV and radio
generating over £85m. The live music market also boosted income
in 2009 bringing in £18m, up from under £14m in 2008.
Hence, a balanced view for the outlook of this sector is to accept
that live music revenues may well be moving onto a lower growth
trajectory than during the boom years – but please acknowledge
that (i) it’s still growth and (ii) that the sector is innovating in ways
that are arguably just as impressive as those in the digital music
sector.
Collecting societies: succeeding overseas
PPL and VPL increased their licence fee revenues to £141m, up from
£140m in 2008. £72.1m of these revenues were paid through to
record companies. Broadcast and Online revenue was broadly
similar to 2008 with small growth in both the volume of licensees
and the revenue generated. Revenue growth in 2009 for Public
performance would have been around 6% were it not for the
adverse effect of The Copyright Tribunal decision. As a result, as an
exceptional item, the company accounted for refunds totaling
£18.1m relating to the period 2006 to 2009.International revenue
grew by 40% to £21.6m, leading to an incredible 250% growth over
the last three years. PPL are anticipating growth for 2010, with the
domestic collections growing slightly and international revenues
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Publisher direct revenues, a proactive success story
Publisher direct revenues are the hardest of all the numbers in this year’s
report to calculate, as there are no official industry statistics available
and the players involved are simply too diverse to generalise. Given the
vacuum of knowledge about publisher direct revenues, the primary goal
was to move the analysis beyond the standard rule of thumb of 40:40:20
(mechanicals: performance: sync) which is often used to summarise a
music publisher’s business model. This year, we’ve built upon a bottom up
approach of working with specific publishers and adopted a more top down
company accounts analysis which allowed for thirty major UK publisher
entities to be studied. We also now refer specifically to UK income as group
turnover because it is income received from foreign affiliates from the sales
and performance activity overseas of UK signed writers. As with PRS for
Music, PPL and BPI licensing revenues, we do not net off revenues collected
here and (then) sent overseas – a caveat worth noting.
Our calculated estimate is that publisher direct revenues grew by an
impressive 6.1%, surpassing £100m for the first time, reaching £103m.
Whilst this is only an evidence based estimate, what is clear is that publisher
direct revenues performed relatively well in 2009. For the four major
publishers, group income increased on the year with growth rates ranging
from 4% to 15%. Domestic UK turnover also increased, although by less
than group income, suggesting a similar theme that international revenues
(which flow through sub-publishing networks) are playing an increasing
role in the overall performance of UK music. In nearly all situations turnover
has increased by more than PRS for Music distributions. One could draw
many conclusions from this observation. One plausible argument is that
publishers are becoming even more proactive in the area of sync licensing,
and that helps create and grow the market. Another take could be to
acknowledge the role of other collecting societies. As already mentioned,
the growth in overseas income for PRS for Music may also have a positive
spillover impact on publishers ‘group’ income through overseas collecting
societies driving publisher revenues through their sub publishing network
for UK signed writers.
One final observation to come out of this work is that major publishers
are increasing their share of direct revenues, whilst seeing their share of
collective revenues fall. This fits with a broader theme coming out of
our long tail work, in that the market grows but the spoils of that growth
are skewed towards major players in the head. By contrast, markets that
are licensed collectively can expect a more democratic distribution, with
distributions to majors up but not as much as the mean. However, whilst
the sector is a star performer of this year’s report, two important challenges
lie ahead. Firstly, sectors like the computer games industry (which is worth
more than the entire recorded music industry in the UK) are still fledgling
in their relationship with music publishers, with limited coordination across
the sector at present. Secondly, the ability to gauge the health of the UK
publishing sector is becoming increasingly complex with multi-territorial
licensing more prevalent, as well as service based publisher models like
Kobalt changing the definition of what a publisher actually is. This only
goes to reiterate the need to correct the deficit in data which the sector
makes available to stakeholders who wish to understand it better.
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Recorded industry licensing income: continued growth
Another success story for record companies in 2009 is the continued
growth of secondary revenue (such as synchronisation and
merchandising), up 6.5% to £193.5m. It is important to note that
for 2009, this figure does not include revenue from consumer facing
advertising funded services such as We7 and Spotify, which is instead
captured in the B2C values. As with other changes in methodology, a
backward adjustment has been made in order to keep the methodology
consistent and offer a meaningful growth trend.
Therefore, this valuation of £193.5m captures synchronisation licensing
from the use of sound recording in film, TV and games; multiple rights
income from ‘360 degree’ deals; from direct sales and licensing of
recorded music copyrights; and payments from PPL and VPL which is
captured in the double accounting adjustment. Secondary revenues have
been steadily increasing for four years and now make up over 20% of total
record company revenue. Key contributions to growth came from artistrelated income and music used in computer games.
As mentioned under the recorded music section earlier in this paper,
trade income has experienced a change in fortunes with a small increase
of £13.2m taking trade income from £915.6 to £928.8m, reversing the
trend of recent years. This means that the combined (trade and secondary
revenue) picture is relatively healthy, with total domestic revenue up a
modest 2.3% from last year.
Advertising and sponsorship: resilient and reactionary
As with last year, we have worked with FRUKT to construct an evidence
based value on this unsung sector. In 2009 we saw marginal growth of 1%
with revenues totalling £89.8 m. Notably, this value has been consistent
at around £90m for the last three years, suggesting that we might have
established the ‘size of the overall pie’ which investors are willing to
spend in this area. These signs of stabilisation are in contrast to the UK
advertising market as a whole; where the IAB has reported a 12.6% overall
drop in spending. This would hint towards two things; (i) that many
brands are committed to keeping their music platforms (e.g. O2, Orange
and Tuborg) and (ii) that as the economy picks up, music sponsorship can
expect to benefit.
Live Music Sponsorship and Digital were the key growth sectors, although
this could be considered ‘rearranging the deckchairs’ rather than new
money. Of the two, Live Music Sponsorship is the healthiest channel
of investment, growing 29.4% and now accounting for a third of music
expenditure. Significant investment came from brands such as O2 in venue
naming and there has been an increase in festival activity by a number
of brands such as Tuborg and Barclaycard. In contrast, Event Creation
by brands fell by 5% although much of this expenditure has shifted into
traditional live music sponsorship. Investment through Digital channels
such as Vodafone and XBOX showed the highest growth in 2009 with an
increase of 37% compared to 2008, contributing £6.2m. This reflects wider
market indicators of a move away from TV and ‘above the line’ towards
online advertising. TV Investment dropped by 13.5% to £21.6m, with fewer
ad-funded programmes present. Investment in core TV properties such
as X Factor remains strong and there are signs of recovery for 2010. Artist
Endorsement stayed relatively stable at £2.8m. In terms of deals done,
there was growth in lower level endorsements rather than the high profile
campaigns of 2008. However there were a few high profile campaigns
including Duffy and Diet Coke, Girls Aloud and Microsoft and Pixie Lott with
Nokia. Advertising Support predictably, given the economic context, has
been cut by 16.7%. Although it is expected to bounce back in 2010. The
following pie chart shows where the money is found for 2009, but what is
most interesting is that money is moving towards live.
Page 7 of 9
The outlook for 2010 looks positive for investment in music by brands.
Initial indicators show the scaling up of activity by certain brands,
including Pepsi and Vodafone, and the entrance of a number of smaller
investments such as Impulse, River Island and SEAT across sectors.
Moving forward, more brands are looking to create an enduring impact
with consumers will want to do more than sponsor a festival or give
away downloads and will begin investing across multiple channels.
These brands will look to create multi-channel platforms, diversifying
their media presence, which will lead to more interest in music and in
turn benefit more creators. Perhaps Iggy Pop really is more than just a
‘passenger’ in today’s music industry.
Tourism, music and the economic recovery
There are two obvious ways a debt ridden UK economy can get out
of its current mess: (i) devaluation with a mind to exporting its way
back to recovery or (ii) importing wealth from overseas. The latter can
be supported by tourism and, whilst tricky to measure in government
accounts, is one of the trusted levers in economic development
The dynamics behind this snapshot are interesting. Whilst London’s
live music revenues are growing, their relative share of the growing live
music pie has been shrinking over time, as out of town festivals drive
growth away from the big smoke and towards the green grass. That
statement might feel like common sense made complicated, but it
offers an insight into what live music and tourism stakeholders can do
together with this newly created data. Putting London’s performance
aside, consider the regional highlights; Scotland has just over 8% of the
UK population and produces 11% of live music revenues, suggesting that
it punches above its weight. Not only that, it has grown its live music
industry by 37% since 2006 – second to the South West of England
which has almost doubled over the same period!
worldwide. When you consider the economic prospects for the UK,
where the past decade of growth and jobs has come predominately
from the same public sector spending which is about to get the deepest
cuts in a generation, you can appreciate how tourism has a role to play
in sustaining revenues.
If the economic activity generated by tourism is needed more now than
ever before, it’s worth revisiting the role music plays in driving tourism,
visiting heritage sites, such as the Cavern in Liverpool or live music
through ticket sales, on the night spend and hotels, to name but a few.
To add to this debate we have offered an insight into the PRS for Music
live data whereby we were able to segment the live market by postcode.
This geographic breakdown offers a different perspective, separating
venues and revenue by postcode before bundling back up to meaningful
geographic blocks, as shown in the pie chart below. This offers not only
a snapshot of the geographic make up of the UK live music industry,
but introduces a better evidence base upon which the live sector, policy
makers and tourism industries can base decisions.
carried across to its impressive performance in tourism, with events like
RockNess, T in the Park and the Edinburgh Fringe Festival selling music
whilst promoting tourism. What this data encourages policy makers
and stakeholders to do is to encourage an evidence based link between
data and decisions. For far too long, people have have offered a token
gestures to music’s role in tourism by pointing at tourists crossing
Abbey Road in London. Given the very real contribution a festival can
make to a local economy or a band can make to a city’s image, such
gestures do a disservice to the very real contribution that music makes
to economic activity. Music has and always will be one of the UK’s best
tourist attractions, and our challenge is to provide the industry with
better research and better data that allows a more robust assessment of
music’s value to be made, with greater clarity.
This outperformance of Scotland’s live music sector could be plausibly
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Music’s role in the economic recovery
Feargal Sharkey, CEO UK Music
It is no secret that the UK economy is in need of a
little help at the moment and I am convinced that the
creative industries have a valuable role to play.
of £63 per head on non-music purchases in the Beauly
area. In 2008, Glastonbury raised approximately £36m
for people of the Mendips and created around 1,000 jobs.
As we know, music is a national asset and we are one of
three countries that export more music overseas than
we bring in. More than that, our heritage is second to
none and we host a number of iconic landmarks – for
instance Carnaby Street, Salford Lads Club and, of
course, the Abbey Road zebra crossing. These are the
places where music fanatics make a pilgrimage, as they
would to Graceland, the Grand Ole Opry or the Rock
and Roll Hall Of Fame.
Such highlights are illuminating but there is still more
to be done in order to fulfil the potential of live music.
Lifting the bureaucratic licensing restrictions that are
stifling music performances in smaller venues offers
one straight forward example, but there is surely scope
for a more comprehensive and joined-up strategy.
Recognising the very real contribution a festival can
make to a local economy, or the impact an artist’s
success can have on a city, a proper music tourism
strategy, that understands the value of music and
appreciates the importance of allocating funds for
maximum impact, is long, long overdue.
But heritage is one thing; the living breathing music
economy is another. As we’ve already seen, consumer
spend on live music is now breaking the £1.5bn mark,
encompassing everything from performances in the back
rooms of pubs, to arenas, stadiums and our increasingly
diverse festival season – a season that stretches from
the Shetland Folk Festival to the Eden Session in
Cornwall with an ever-growing number of events in
between.
With Government looking to stimulate spending
and employment outside of the South East, live
music represents a major opportunity. According to
Association of Independent Festivals research, more
than two thirds of music fans attending their member’s
events spend 3 days of more in the surrounding local
area. Fans not only spend money in a venue or onsite,
they also boost spending in the local economy - and
this is over and above the jobs created whilst setting up
an event, on site and clearing up after. Visitors to the
Belladrum festival near Inverness spend an average
In turn, this locks music into an even bigger economic
agenda. As the values of market commodities are
eroded, the value of service industries must increase
to keep the UK growing. In this context, our creative
industries clearly have a role to play. UK music,
film, television, computer games and books are all
a recognised success on the world stage. However,
there needs to be an appetite to support such creative
ventures, and – especially post credit crunch – this is not
coming from the conventional banking sector, with its
preference for the familiarities of low risk.
This must change, and I believe we have a clear case for
policy-makers. Music has and always will be one of the
UK’s best tourist magnets and can offer a very high return
on minimal investment. Our challenge going forward is
to provide the comprehensive data, analysis and support
that can help them allocate funds more effectively.
Acknowledgements: This paper would not have been possible had it not been for the willingness for many analysts across the music industry to pool their data and collaborate. Hence we would like to go
beyond thanking the following people, but rather share the credit with them as this simply would not have been possible without everyone throwing their data into the collective ring. From PRS for Music,
we would like to thank: Robert Ashcroft, Jeremy Fabinyi, Phil Trzcinski, Bruce Dickinson, Stewart McKie and Chris Haynes. The authors are heavily indebted to the analysis and comments from Chris Green,
Adam Liversage and Rob Crutchley from the BPI and Gabi Lopes from the IFPI. Steve Redmond provided excellent advice on interpreting the Entertainment Retailers Association analysis. For the transatlantic
comparison we are grateful for the feedback from Josh Friedlander of the RIAA and consultancy work of NYU graduate student Robby Towns. Jonathan Morrish provided valuable assistance with interpreting
PPL's revenues. Various players in the live music industry collaborated on various levels, and particular thanks to Greg Parmley from IQ magazine, George Prior from Tixdaq and Jessica Koravos from AEG Live
Europe. On the publishing side, Chris Helm and Hank Forsyth from EMIP and Will Downs from Sony ATV provided essential support in understanding group income, Steven Navin and Will Lines of the MPA
provided useful insights and Cliff Dane produced valuable company accounts analysis from across the music industry. Dom Hodge and his excellent team at FRUKT calculated the market for advertising and
sponsorship, once again shedding light on a sector that is often overlooked. We would like to thank Feargal Sharkey, Nicola Slade and Adam Webb of UK Music, along with Olaf Furniss of Born to be Wide in
Edinburgh, for illustrating the significant role of music in driving tourism. Finally, we would like to thank Steve Cole at PRS for Music for his skill in producing this report.
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